Economy Grows by 6.48% Despite Rising Inflation

The Nigerian economy grew by 6.48 per cent in the third quarter of this year, while inflation which had fallen in the past three consecutive months increased to 11.7 per cent in October from 11.3 per cent the previous month, latest data from the National Bureau of Statistics (NBS) has shown.

The Gross Domestic Product (GDP) growth, which was up from 6.28 per cent in the second quarter, however, witnessed slower growth output due to decline in non-oil sector output.

“While the oil sector witnessed positive growth for the first time in four quarters, the slower non-oil sector growth was driven by growth in activities recorded in the building and construction, cement, hotel and restaurant, and electricity sectors,” the NBS said.

The oil sector contribution to real GDP in the third quarter stood at 13.42 per cent, from 14.28 per cent within same period in 2011.
Nevertheless, the non-oil sector remained a major driver of the economy with 7.55 per cent growth in real terms compared with 8.76 per cent in the previous year.

The NBS said: “This decline was largely attributed to decline in output in the Agriculture, Telecommunications, Wholesale and Retail trade and Real Estate sectors.”

Average daily crude oil output rose significantly to 2.52 million barrels per day (mbpd) from 2.38 mbpd in 2011, the NBS added.

The growth rate, with their associated gas components, in real terms stood at 0.08 per cent in oil GDP as against -0.26 per cent within same period the previous year.
Oil accounts for more than 80 per cent of Nigerian government revenue and around 95 per cent of its foreign exchange earnings.

“During the period, activities of vandals and oil theft decreased as a result of intensified surveillance instituted by government in the oil producing areas. Moreover, re-entry into previously abandoned fields by some oil majors and renewed production there from was responsible for the slight improvement in oil GDP during the period under review. The sector also benefited from the relative stability in international crude oil market price and the exchange rate of naira to the dollar during the third quarter of 2012.”

Meanwhile, Core inflation, which excludes volatile items such as food, dropped to 12.4 per cent year-on-year in October from 14.7 per cent the previous month.

The Central Bank of Nigeria (CBN) had been battling to contain inflation to a single digit with several monetary tightening tools and will definitely take the latest inflation figures into consideration today at the end of its Monetary Policy Meeting (MPC) today.

According to the latest CPI figures released yesterday, year-on-year, the relative moderation in headline inflation in September had been offset by the rising cost of food items. The food index increased to 11.1 per cent in October from 10.2 percent over the same period.

“Since its year-on-year peak of 15.2 percent in June of this year, the Core index continues to exhibit a declining trend partially as a result of uncompromising monetary policy on the part of the CBN,” it stated.

The NBS blamed the rise in the Food Index on higher food prices in various classes led by meat, fish, potatoes, yams and other tubers, fruits, bread and cereals as well as the effects of the recent floods which ravaged parts of the country.

It said: “While the impact of security concerns on agricultural production has eased significantly, the higher food prices continue to reflect the impact of recent floods on the production of farm produce, resulting difficulty of moving food products to markets across the country, coupled with higher demand for food items due to the just concluded Muslim festival.”

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